Every state and nation imposes a limitation of time within which a case must be filed in a court and, if not filed within that time, it will be disallowed and "thrown out of court." The idea is that witnesses die, disappear and forget over time, just as documents may be lost or disappear over time. Since every state and country has different periods of time for different kinds of cases, and the start-stop time will vary, it is indispensable that if a case is not filed "immediately" after it happens, legal counsel must be consulted to make sure the time has not run.
Statute of Limitations -- what kinds of cases?
Some cases will run in 2 years (the shortest time in California) for basic torts (personal injury), or verbal (unwritten) contracts, and will go to 10 years (construction defects). As the name suggests, it is all "statutory", and each particular case must be investigated specifically to determine how long you have to file before it becomes stale.
Statute of Limitations -- when does it start to run?
Most statutes of limitation start to run immediately upon the event, the auto accident, the breach of the contract, for example, on the assumption that you know exactly when it happens and need to act. Some statutes assume you did not know when it happened (fraud), so the time starts to run when the event is "discovered or should with reasonable diligence have been discovered." Again, "diligence" in asserting your own rights is the key to avoiding having your action barred by the statute of limitations. Other statutes of limitation start to run only when "damaged", so that the event itself did not result in damage until some later time (bad legal advice in estate planning, for example).
Statute of Liimitations -- does anything stop it from running?
We call it "tolling" which can sometimes happen when the defendant is absent from the State, or where there is a fiduciary or confidential relationship existing between you and the defendant (attorney-client, for example), or where you have been falsely induced to delay filing ("don't worry, I promise I'll take care of it."). Minors, of course, have statutes of limitation tolled until they reach the age of majority. Just because you "didn't know", or were "too busy" or "couldn't afford a lawyer", or were in jail or sick, will not generally toll the running of the statute of limitations.
Statute of Limitations -- can it be waived?
A defendant can in writing waive a statute of limitations, promising in advance that you may have an additional year or more, but great caution should be exercised if you are depending on this as a way of avoiding the running of a statute of limitations. If the parties were in an equal bargaining position it would possibly have a better chance of success, but where the parties are in an unequal position (such as with an insurance company), or the statutory right is one of public policy (landlord-tenant, for example), these attempts to waive a statute of limitations are unlikely to succeed.
Statute of Limitations -- what stops it from running?
Simply, filing a lawsuit in the appropriate court against the proper defendant within the time allowed will usually stop the statute of limitations from running. Sometimes cases are filed in the wrong court or forum, (Federal instead of State, or administratively instead of a court), and there is some authority that would extend a very brief period to file in the proper place and still avoid the bar of the statute of limitations. If you are not sure exactly who to sue, you know "somebody" caused the damage but not sure exactly whom, you must still file your action even if it is against "Doe" (fictitious) defendants.
Additional resources provided by the author
For California, Title 2 of the Code of Civil Procedure, secs. 312 et seq., is the primary but not exclusive source for issues of statutes of limitation. Governmental entities have special claims statutes which must also be consulted where they are an intended defendant, which are usually much shorter periods than the statute of limitations which applies generally to non-governmental entities.